Oil Prices Slide Sharply Despite Large U.S. Crude Stock Draw

Oil prices fell sharply in midday trading Thursday, with both major benchmarks dropping over $3 per barrel despite a significant drawdown in U.S. commercial crude inventories.

West Texas Intermediate crude for July delivery was trading at $92.85 per barrel, down $3.17 or 3.3% for the session, according to live price data. The global Brent benchmark fell to $94.98, a decline of $2.83 or 2.89%. The price drop pressured Bakken crude, which was trading at a differential of $3.42 below WTI.

The decline comes even after a bullish weekly inventory report from the U.S. Energy Information Administration. Rigzone reported that U.S. commercial crude oil stocks, excluding the Strategic Petroleum Reserve, fell by 8 million barrels for the week ending May 29. Total inventories stood at 433.7 million barrels, according to the EIA's weekly petroleum status report.

The substantial stock draw, which typically supports higher prices, was overshadowed by broader macroeconomic concerns driving a sell-off in risk assets. Analysts pointed to renewed fears over global economic growth and strength in the U.S. dollar as primary catalysts for the drop. The market appears to be prioritizing demand worries over tightening physical supplies indicated by the inventory data.

For Bakken operators, the price move presents a mixed picture. The large inventory draw suggests a firm underlying physical market, which supports the region's production. However, the immediate financial impact is negative, with the combined drop in the benchmark and the differential pushing Bakken wellhead prices down significantly. At current levels, Bakken crude would be priced near $89.43 per barrel.

In contrast to the crude complex, natural gas prices rallied. The front-month contract was trading at $3.35 per MMBtu, an increase of $0.14 for the day. This provides a partial offset for producers with significant gas output or those engaged in gas capture and processing in the Bakken.

The price volatility underscores the ongoing tension between supportive fundamentals and fragile market sentiment. While operational conditions in the Williston Basin remain stable, such sharp intraday declines can impact near-term cash flow and hedging decisions for independent producers. Market participants will be watching for signs that the physical tightness reflected in the EIA data will eventually reassert itself in futures pricing.